Global and China Chlor-alkali Industry Report, 2013

The industry producing chemicals with sodium hydroxide (caustic soda), chlorine and hydrogen made through the electrolysis of crude salt solution is known as the chlor-alkali industry, involving more than 200 product varieties including caustic soda (NaOH), polyvinyl chloride (PVC), hydrochloric acid, liquid chlorine, hydrogen, methane chloride and epichlorohydrin, among which, caustic soda and PVC are the most important ones.

In 2012, China’s caustic soda production capacity was 37.36 million tons (up 9.5% year on year), the output was 26.99 million tons (up 9.42% year on year), and the capacity utilization was 72.2%. Caustic soda enterprises are mainly concentrated in North China, East China and Northwest China. In 2012, the top five provinces by output were Shandong, Jiangsu, Henan, Inner Mongolia and Zhejiang, accounting for 21.69%, 15.36%, 6.24%, 6.06% and 5.20% of total caustic soda output respectively.

Since mid-August 2010, China’s increasing power limitation, production restriction, energy conservation and emission reduction policies, high crude salt prices and stable downstream demand have directly promoted the prices of caustic soda. In July-August 2012, the price of caustic soda was up to RMB 960 / ton, an increase of RMB 260 / ton compared with RMB 700 / ton in January-March 2011.

In 2012, China’s PVC production capacity was 23.41 million tons (an increase of 8.23% year on year, accounting for 44.4% of the global total), and the output was 13.18 million tons (up 1.74% year on year). China’s PVC capacity utilization declined from 71.1% to 51.4% in 2006-2009, and then picked up in 2010-2011, but declined by 3.6 percentage points year on year to 56.3% in 2012, and remained below 70% in the year, with an evident trend of overcapacity.

An overview of the chlor-alkali industry shows that the production center is obviously transferring towards the central and western regions, and the capacity of enterprises in the central and eastern regions without resource advantages will gradually shrink. In the future, in the resource-rich western region, large conglomerates with raw material, cost, technology, capital and management advantages as well as integrated industrial chains will hold advantageous and controlling positions in the competition.